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Notepad is a common text-only (plain text) editor. The resulting files—typically saved with the .txt extension—have no format tags or styles, making the program suitable for editing system files to use in a DOS environment and, occasionally, source code for later compilation or execution, usually through a command prompt. It is also useful for its negligible use of system resources; making for quick load time and processing time, especially on under-powered hardware. Notepad supports both left-to-right and right-to-left based languages. Unlike WordPad, Notepad does not treat newlines in Unix- or Mac-style text files correctly. Notepad offers only the most basic text manipulation functions, such as finding text. Only newer versions of Windows include an updated version of Notepad with a search and replace function. However, it has much less functionality in comparison to full-scale editors.

Microsoft's first Notepad version predates Windows. They included it in a set of utilities they bundled with the Microsoft Mouse as early as 1983.[1] Like subsequent versions, it was a plain text editor that used the mouse for menu navigation and text manipulation. However, unlike its Windows successors, it was a DOS program limited to full-screen operation.

Up to Windows 95, Fixedsys was the only available display font for Notepad. Windows NT 4.0 and 98 introduced the ability to change this font. As of Windows 2000, the default font was changed to Lucida Console. The font setting, however, only affects how the text is shown to the user and how it is printed, not how the file is saved to disk. The default font was changed to Consolas on Windows 8.

Up to Windows Me, there were almost no keyboard shortcuts and no line-counting feature. Starting with Windows 2000, shortcuts for common tasks like new, open and save were added, as well as a status-bar with a line counter (available only when word-wrap is disabled).

Notepad also has a simple built-in logging function. Each time a file that starts with .LOG is opened, the program inserts a text timestamp on the last line of the file.[2][3]

Notepad accepts text from the Windows clipboard. When clipboard data with multiple formats is pasted into Notepad, the program only accepts text in the CF_TEXT format.[4] This is useful for stripping embedded font type and style codes from formatted text, such as when copying text from a web page and pasting into an email message or other WYSIWYG text editor. Formatted text can be temporarily pasted into Notepad, and then immediately copied again in stripped format to paste into the other program.

Notepad can print files, but doesn't print correctly if Word Wrap is turned on. Headers, footers, and margins can be set and adjusted when preparing to print a file under Page Setup. The date, file name, and other information can be placed in the headers and footers with various codes consisting of an ampersand ('&') followed by a letter..

The Windows NT version of Notepad, installed by default on Windows 2000 and Windows XP, has the ability to detect Unicode files even when they are missing a byte order mark. To do this, it utilizes a Windows API function called IsTextUnicode().[5][6] However, this function is imperfect, incorrectly identifying some all-lowercase ASCII text as UTF-16. As a result, Notepad interprets a file containing a phrase like "aaaa aaa aaa aaaaa" ("4-3-3-5") as two-byte-encoded Unicode text file and attempts to display it as such. If a font with support for Chinese is installed, nine Chinese characters (桴獩愠灰挠湡戠敲歡) display. Otherwise, it displays squares instead of Chinese characters.

Some people misinterpreted this issue for an easter egg. Many phrases that fit the pattern (including "this app can break" and "bush hid the facts") appeared on the web as hoaxes. Windows expert Raymond Chen correctly attributed it to the Unicode detection algorithm.[7] This issue was resolved in Windows Vista and newer versions of Notepad.

Notepad does not require a lock on the file it opens, so it can open files already opened by other processes, users, or computers, whereas WordPad cannot. Also, since Notepad lacks advanced formatting functionality, many people find its simple interface faster and easier to use for basic text operations. The MS-DOS Editor, especially as updated in Windows 95, where it became an MDI application, also provides many features never offered by Notepad.